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Long-awaited CPTPP presents opportunities and pitfalls

Update: February, 16/2018 - 14:00
Workers among a massive pile of textiles at the Bắc Giang Garment Company factory in northern Bắc Giang Province. — VNA/VNS Photo Trần Việt
Viet Nam News

HÀ NỘI — With the eagerly anticipated conclusion of talks on the Comprehensive Partnership and Trans-Pacific Partnership’s (CPTPP) in late January, Việt Nam embarked on a still more difficult path. The country must improve productivity and administration and demonstrate an overall commitment to the free trade conditions of the agreement, lest its benefits are wasted on a workforce and business community that are not yet ready to meet global standards.

Deputy Minister of Industry and Trade Trần Quốc Khánh, leader of Việt Nam’s negotiation delegation for CPTPP, said on the Ministry of Industry and Trade’s online portal in late January that he expected the agreement to represent a new generation of freedom of commerce, high standards and trade balance.

Khánh said it would be sending a strong message of determination to accelerate economic growth, create jobs, improve social well-being, facilitate trade development and strengthen economic cooperation between countries in the Asia-Pacific region, especially in the context of globalisation and the countervailing rise of global protectionism.

An official announcement on the General Department of Customs’ (GDC) online portal on January 30 stated that following the US withdrawal from the Trans-Pacific Partnership Agreement (TPP), the signatories to the CPTPP now consider Japan as the agreement’s leading country, retaining its predecessor’s overall outlook on the trade agreement.

As an improved replacement for the now-defunct TPP, the CPTPP accounts for nearly 13 per cent of world GDP and 15 per cent of total trade volume. Its ultimate goal is to create an Asia-Pacific free trade area comparable to the European Union, stated the GDVC.

Nguyễn Đức Thành, Director of the Việt Nam Institute for Economic and Policy Research said in its 2017 Macroeconomics fourth quarter report that after the APEC Summit’s success, CPTPP should open up many opportunities and challenges for the Vietnamese economy in the future. 

The initial removal of tariff barriers will enable Vietnamese goods to gain easier access into other CPTPP markets. However, the opposite holds true as foreign goods will also pour into Việt Nam, posing greater competition for domestic enterprises and forcing them to improve production efficiency and product quality or perish.

He warned that economic growth dynamics in Việt Nam are still lacking from low labour productivity and over-dependence on the world economy and the foreign invested sector, especially when the advantage of cheap labour costs will diminish due to the 4.0 industrial revolution.

Silver Lining 

Hoàng Văn Cường, Vice Rector of the National Economics University, told the GDC at the end of December 2017 that the delay in the CPTPP is actually an opportunity for Việt Nam and its firms.

“Overall, the CPTPP retains the old TPP provisions, but it allows member countries to withdraw from a number of issues, mainly intellectual property commitments. Thus, the CPTPP’s changed or delayed terms have somewhat slowed down the integration process between countries,” said Cường.

However, this is a good opportunity for Việt Nam, as the country no longer has to become integrated immediately into all CPTPP conditions. “Postponement means more time for our firms and policymakers to prepare”, he said.

He also admitted that the US withdrawal lessens the agreement’s potential for economic returns to Việt Nam. Without the US, the CPTPP loses access to a $12 trillion  consumer market. 

Had the US stayed in the agreement, all 12 member states would account for 26.6 per cent of global trade, of which about 11.4 per cent would come from intra-regional trade among member countries, added Cường. 

Economist Lê Đăng Doanh added to Cường’s opinion that though many companies have not fully grasped the CPTPP’s impact, they can overcome its challenges with enough effort.

‘Even without the US’s import demand, the 10 remaining CPTPP member markets  are also full of potential for Vietnamese firms to tap into,’ Doanh said.

He was certain the CPTPP would contribute positively to Việt Nam’s economic and administrative reform. 

Meanwhile, Trần Văn Lĩnh, chairman of Thuận Phước Seafood and Trading Corporation said to the GDC that domestic enterprises sincerely desire fundamental change in institutions to meet the requirements of global integration.

He said the most important thing upon joining the CPTPP is for Việt Nam to become a full market economy. This means Vietnamese enterprises will be free from trade impediments imposed by other countries, which so far have refused to acknowledge it as a market economy.

Having addressed outstanding issues since its conception at the 2017 APEC Summit in Đà Nẵng City, delegations from the CPTPP’s 11 member economies, including Australia, Brunei Darussalam, Canada, New Zealand, Chile, Malaysia, New Zealand, Japan, Peru, Singapore and Việt Nam, are working in preparation for its March 2018 signing in Chile.

Speaking at the 48th Annual World Economic Forum in late January, Deputy Prime Minister Vương Đình Huệ stressed that in 2018 Việt Nam hoped to fulfill its trade liberalisation commitments and accelerate the ratification of the CPTPP.

In December 2017, at a meeting with Toshimitsu Motegi, Japan’s Economy Minister, Prime Minister Nguyễn Xuân Phúc suggested that Việt Nam and its major strategic partners should take the lead in accelerating the conclusion of the CPTPP. — VNS

 

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